NOTE:
THIS NEWS STORY is designed to help the public understand developments in the WTO. While every effort has been made to ensure the contents are accurate, it does not prejudice member governments’ positions.

Speaking in an informal meeting of the Trade Negotiations Committee, which oversees the negotiations in all topics, they were sobered by the chairs’ reports circulated on 21 April 2011. These reflected blockages in key areas of the talks but they also recorded how much has been achieved in almost 10 years of negotiations, which several speakers said should not be discarded.

Mr Lamy, who chairs the committee, said he will report back to the membership at the next meeting on 31 May (see full statement below). Several speakers agreed with him that three options will not work: “business as usual” (continuing as before), “stopping and starting from scratch”, which some speakers called “rebooting” — “since the issues blocking progress today will be the same ones on the agenda tomorrow,” Mr Lamy said — and “ ‘Drifting away’ by wishing the issue would simply disappear.”

The challenge is therefore to find a viable alternative to these three options, including the possibility of continuing to aim for all subjects to be agreed together or for some to be concluded faster than others, they said.

“We are not going to decide among these possibilities today,” Mr Lamy said. “In fact, I strongly suggest we do not rush into any judgment.” Several speakers agreed.

A number of ambassadors echoed Mr Lamy’s warning about the dangers as the membership faces the real prospect of the Doha Round failing, with the political “window of opportunity” that is seen to exist in 2011 rapidly closing. The costs would be the lost opportunity of boosting trade and development, increased protectionism and the erosion of faith in the trading system, they said.

“We need to be lucid and realistic,” Mr Lamy said. “Failure of the WTO to deliver on its legislative function, failure of the WTO to update the rules governing international trade — last updated in 1995 — by adapting them to the evolving needs of its members, failure of the WTO to harness our growing economic interdependence in a cooperative manner, risks a slow, silent weakening of the multilateral trading system in the longer term.

“And with this, a loss of interest by political leaders in many quarters, an erosion of the rules-based multilateral trading system, a creeping return to the law of the jungle,” he said.

Several ambassadors spoke of the need for straight talking, in private if necessary, in the search for a breakthrough. Several called for the process to continue to be transparent (information shared) and bottom-up (ideas coming from the members), praising the 21 April texts for following these principles. Some referred to a letter their ministers wrote to the Trade Negotiations Committee on their determination not to let the Doha Round fail (document TN/C/W/58).

Some have already been exploring compromise. The EU, reported on a compromise it has been discussing with some countries on “NAMA sectorals”. This is a proposed deal for free or almost-free trade among countries representing a large share of world trade, in specific sectors in the non-agricultural market access (NAMA) talks, whose span includes forestry and fisheries products as well as industrial goods. The EU referred specifically to chemicals, machinery and electronics.

Mr Lamy included a report on his consultations on this blockage in the 21 April texts. In his statement to the committee he described this as a “classic mercantilist issue: tariffs on industrial products, the bread and butter of WTO negotiations since their inception. (…)

“It is therefore disappointing that no ground for compromise has been found on the issue of industrial tariffs yet. But what is even more worrying for many of you is that this situation does not seem to result in too much discomfort in some quarters,” Mr Lamy went on.

“Perhaps because there is a sense that there is still time or that the situation will solve itself once the ‘political environment’ is right. Or perhaps because some believe that they have other avenues to pursue trade opening or regulating trade, such as through bilateral deals.”

The EU and some others agreed that this is an “immediate gateway” issue that is blocking progress even though they stressed that other difficult issues lie beyond the gate. Some delegations welcomed the EU’s efforts. Some others said that the focus on NAMA sectorals is driven by the export interests of some developed countries, deflecting attention away from the development objective of the Doha Round.

Several speakers repeated concerns they have expressed over the past months, least-developed and smaller developing countries in particular saying the deadlock prevents them from enjoying the gains that are already promised such as duty-free, quota-free market access for least-developed countries in richer markets, and cuts in cotton subsidies in rich countries.

Some developing countries repeated their complaint that richer countries are demanding too much. But some developing and developed countries said all members are at fault and that all share the responsibility of trying to find a way through.

As we are all aware, these are difficult times for the negotiations that this body is charged to oversee. Today's meeting will be significant — not because we expect to see any miracles — but because it is a very necessary occasion for us to come together in a sober and responsible way, in order to be able to consider collectively the next steps in the negotiations.

As promised, the draft texts and reports that the Negotiating Group Chairs and I circulated on 21 April contained no surprises. They show the magnitude of what has been achieved in nearly ten years of hard work, and also the issues that still separate us from a successful outcome. As I indicated in my message to you last week: this Round, as it was mandated, cannot be completed without these issues being solved. To be sure, there are still many areas of these texts where differences exist and need to be resolved through a further hard bargaining.

But my frank assessment is that under the right conditions of temperature and pressure a deal would be doable, bearing in mind that “nothing is agreed until everything is agreed”, were it not for NAMA, where the magnitude of the gaps among the major players is effectively blocking progress in other areas and is putting into serious doubt the conclusion of the DDA this year. This Round is, once more, on the brink of failure.

Impasse

In recent days observers and commentators have advanced many reasons and explanations for the current impasse in the negotiations. For example you have all been avidly reading and even participating in the web forum generated by CUTs or read the VoxEU e-book that was presented yesterday.

For some, the launch of this Round was not well prepared. It was more the product of history, a hasty, even if well intentioned political response to the 9/11 events, rather than the result of a well thought, shared consensus in favour of further economic reforms.

Some have argued that the increase in the WTO membership and its diversity has rendered the task of building consensus too cumbersome and complicated. 153 vastly different Members have a harder time agreeing than the original 23 GATT signatories.

For others, the negotiated agenda was overloaded. They argue that the inclusion of highly controversial issues such as agriculture reform or fisheries subsidies have created huge resistance to a successful conclusion of the Round. They also argue that the single undertaking is a systemic handicap to bring together regulatory disciplines and market opening which cannot be traded off. For others still, the agenda is out-dated: it focuses too much on classic trade issues such as tariffs and subsidies, and disregards important issues in today's trade such as export restrictions, energy or investment, just to name a few.

Some also argue that, with the passing of time, the original exchange rate between agriculture concessions and those in industry have become obsolete, that the current high prices of commodities make binding concessions on agricultural tariffs or subsidies less relevant.

Some advance that the economic crisis has aggravated latent protectionist pressures that it has led to inward-looking, isolationist policies, that it has weakened the ability of big WTO members to provide the necessary leadership. In sum, the multilateral trading system which has so well served Members for 60 years, contained a major outbreak of protectionism in these last couple of years, is falling victim of its own success. If it ain't broken, why fix it?

Finally, some go as far as to say that the inability to conclude the Doha Round is nothing but the reflection of a wider malaise: it is part of the general questioning of globalisation. The world, according to this view, has lost appetite for further trade opening. Even more, the current trend would be part of a general retreat from multilateralism, which has already contaminated other international negotiations, be it climate change, the international monetary system, macro-economic coordination or even disarmament. All this would be part of a shift in continental geopolitics which would imply painful, slow, and still to come adjustments in global governance.

And yet, closure on the remaining open issues is blocked because of a classic mercantilist issue: tariffs on industrial products, the bread and butter of WTO negotiations since their inception. The matter over which trade negotiators have haggled for more than 60 years and on which they have always been able to find a compromise, using a mix of imagination, determination and spirit of compromise. It is therefore deeply disappointing that no ground for compromise has been found on the issue of industrial tariffs yet. But what is even more worrying for many of you is that this situation does not seem to result in too much discomfort in some quarters. Perhaps because there is a sense that there is still time or that the situation will solve itself once the “political environment” is right. Or perhaps because some believe that they have other avenues to pursue trade opening or regulating trade, such as through bilateral deals.

Status quo?

And yet, what emerges from the consultations I have had so far is that simply keeping the status quo in the Doha Round is dangerous. Of course, short-term, the WTO machinery will continue to deliver on its monitoring functions in the many committees which keep overseeing the implementation by Members of their commitments. The WTO will also continue to settle the disputes brought by its Members. The Secretariat will continue to provide technical assistance to build trade capacity in developing countries and to help improving Aid for Trade. None of the thirty countries negotiating their accession have lost their appetite for WTO membership because of the difficulties in the Doha Round. In fact today we are one step closer to welcoming Vanuatu into the WTO family. In sum, the WTO is not in danger of immediate irrelevance.

But we need to be lucid and realistic: failure of the WTO to deliver on its legislative function, failure of the WTO to update the rules governing international trade — last updated in 1995 — by adapting them to the evolving needs of its Members, failure of the WTO to harness our growing economic interdependence in a cooperative manner risks a slow, silent weakening of the multilateral trading system in the longer term. And with this, a loss of interest by political leaders in many quarters, an erosion of the rules-based multilateral trading system, a creeping return to the law of the jungle.

Since the GATT was signed in 1948, successive trade rounds have gradually reduced trade barriers and built a stock of rules addressing evolving needs of international trade. Up until the Kennedy Round, the major focus was on reducing tariffs. The Tokyo Round in 1979 resulted in a major update of WTO rules with new agreements on TBT, anti-dumping, subsidies and countervailing measures, import licensing, and customs valuation. Government procurement was brought into the GATT for the first time. This was an important step of modernization, reflecting growing interdependency through trade. The Uruguay Round in 1995 improved previous agreements and added new rules on SPS. But it was a lot more besides, with the addition of services and intellectual property, a revamped dispute settlement understanding, a first step towards the inclusion of agriculture into the rules of global trade, and of course the re-booting of the GATT and its transformation into the WTO. The Doha Development Round is a further step in this long journey. It is a means to keep adapting our rules to the trading realities of today, addressing the needs of global production chains as well as SMEs, addressing sustainability issues related to trade, i.e. greater disciplines on agriculture, trade facilitation, rules to discipline fishery subsidies which contribute to depleting our oceans, rules addressing non-tariff measures, to name a few.

What will work?

Completing this task is urgent today, since there are already new issues in the horizon which require our attention. It is difficult to see these new issues being tackled multilaterally if we are not capable of finding a solution to the issues within the Doha Round. In sum, today's stalemate over the Doha Development Round risks damaging the capacity of the WTO to deliver trade opening for the benefit of all, which is its core mission

If I have turned to history, it is because I believe it provides useful lessons for our priority today, which is to look at the wider picture before discussing next steps. Today we must begin a process of serious, active reflection on how to build upon the product of our ten years' work and on how to keep alive the principles and the commitments that lie at the heart of the Doha agreements. In doing so, I believe three options will not work: Option 1 “business as usual” will not work. Option 2 “stopping and starting from scratch” will not work, since the issues blocking progress today will be the same ones on the agenda tomorrow. Option 3 “drifting away” by wishing the issue would simply disappear will not work either.

I also think it is imperative to remind ourselves of the aims of this Round. It is intended to harness the economic energy released by technological changes, by skill improvements and by multilateral trade opening to promote growth, jobs and creating opportunities across the whole WTO membership, especially among the poorest developing Members. This Round was launched because a broad spectrum of Members converged on its potential as an instrument for growth and development. I see it as our duty to keep faith with their vision.

That is why I am calling for our discussions today and in the days to come to be realistic but positive — conscious of how far we have come and how much we risk. We have a heavy collective responsibility, not only for the Doha Round but for the multilateral trading system as a whole. There is no individual clever escape from this collective responsibility.

The question we are confronting today is: what do we do next, and how do we do it? Like all of you, I have heard a wide range of possibilities canvassed. We are not going to decide among these possibilities today. In fact, I strongly suggest we do not rush into any judgment today. These are questions to be approached collectively and in an inclusive manner. Throughout this Round we have placed a high premium on operating in a “bottom up” way, and I think we should continue to do so.

That is why I propose to pursue, after this meeting, a process of consultation with the whole membership about the way ahead. I have already started and intend to carry this out by consulting groups and individual Members in various configurations, at various levels, including at Ministerial level at the upcoming APEC Trade Ministerial meeting and the Ministerial meeting in the margins of the OECD Ministerial on 26 May. Of course, my door is, as always, open to delegations who would like to meet with me. I will continue to listen to your views during the next weeks and propose to report back to the TNC on 31 May. Today and in the meanwhile, the Negotiating Groups should continue their work wherever their Chairs judge it to be productive, and what you found in the Easter package shows that there is useful work ahead, some of which has already been planned by Chairs.

Today's meeting is the opportunity for you to listen to each other. I hope you will all assist by focusing your interventions constructively on our way ahead. This is a time, if there ever was one, to think and act systemically. In this process it is no longer national or group interests that are to the fore, it is our shared responsibility for the aims agreed at Doha that is on the line.

With these words I now open the floor for your comments.

Chairman’s closing remarks

I have listened carefully to all of you during this special session. Let me try to wrap up what I heard today:

1. All Members are aware of the grave risks of the present stalemate, not only for the Doha Round but for our WTO system at large

2. No Member is ready to throw in the towel and lose the acquis [ie, what has been achieved in the talks so far]. No Member is ready to let the Doha Round drift away

3. We need a new approach that goes beyond “business as usual”, and that leads to results this year

4. Various ideas for such a new approach have been suggested, starting with, but not limited to, solving the NAMA impasse

5. These suggestions need further elaboration, further discussion, including at political level.

The conclusion is that Members are clear about what they do not want and open to ideas on the way forward.

I intend to conduct consultations to test suggestions on the way forward before the next TNC scheduled for 31 May.